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3 Ways to Save Without Tax Deferral

Should you make the swap to tax-efficient vehicles?

If you apply the “time value of money” concept to saving for retirement, then tax-deferred vehicles like 401(k) and IRAs can be obvious options.1  You contribute pre-tax income and let your money grow, then pay tax on them upon withdrawal. You might even get a smaller tax bill if you’re in a lower bracket by then.

But what if tax rates go up in the future? You could find yourself wishing you had paid taxes on your retirement assets back in 2022, when taxes were lower. Here are three ways to save without deferring your tax bill — and hoping rates never rise:


  1. Roth IRA

A Roth IRA is an individual retirement account that allows you to make post-tax contributions. You pay tax at today’s rates when the money goes into your account, then take money out in future income tax free.


  1. Roth 401(k)

Basically a 401(k) plan with a Roth feature added, a Roth 401(k) also allows you to make after tax contributions.


  1. Life insurance

You can borrow or withdraw money from the cash value component of a life insurance policy, up to the amount you paid into it through premiums, without tax implications.2,3 The death benefit paid out under the policy is generally income-tax free for your beneficiaries. In contrast, beneficiaries are usually taxed if they receive proceeds from your retirement plan.

To find out how a tax rate hike could impact your future tax bills, and which retirement savings vehicle you could add to the mix, talk to your financial professional.


 1Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation

2Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.

3Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.

 Pub11519  2022-136732 Exp. 4/24

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